The stock market’s 10-day winning streak came to a close Monday, ending the Dow’s hottest streak in 17 years. While Wall Street is booming, Main Street continues to grow, but at a less-than-impressive rate.

The only thing holding us back? We’re now living in Washington’s economy.

As Stephen Moore of the Wall Street Journal puts it, “The only thing holding back the economy is Washington, D.C.”

Businesses face a climate of significant uncertainty. Their tax rates, the types and intensity of regulation they face, even the tax rates on those who consume their products have businesses putting investment and hiring on hold. While Congress fights over the best way to spur economic growth, it’s the fighting that keeps the growth from occurring.

Tom Friedman put it best: “You can feel the economy wants to launch, but Washington is sitting on the national mood button. We, the people, still feel like children of permanently divorcing parents.”

Here in Utah, we’re seeing that great divorce create the great divide. In 2008, the Utah economy grew—but just barely at 0.1 percent. The U.S. economy contracted by 0.6 percent. The bottom fell out for everyone through 2009 as the national and state economy fell into the Great Recession shrinking by 4.4 percent and 5.1 percent, respectively. Two years later, both started on the positive path, but at different paces. Utah nearly doubled the national economic growth rate in 2011 (2.3 percent to 1.2 percent) and more than doubled the rate last year (3.2 percent to 1.4 percent).

Through it all, those permanently divorcing parents in Washington never really did learn to get along. So they agreed to put in place a mechanism so unpleasant, so unthinkable that they would be forced to work together to reduce the deficit.

The unthinkable has happened. Welcome to sequestration.

Of course, even that plan didn’t touch entitlement spending, like Medicare, Medicaid and Social Security—essentially the root of the problem. Consider that the average American couple retiring in 2010 had paid approximately $122,000 in Medicare taxes throughout their working lives. That same couple would receive some $387,000 in Medicare benefits.

That’s hardly the definition of sustainable. As Henry Kissinger once said, “An issue ignored is a crisis invented.”

Maybe the president put it most eloquently in lines from two separate speeches to Congress. In 2009, he declared, “This is America, we don’t do what is easy.” Four years later: “Let’s agree right here, right now, to keep the people’s government open, pay our bills on time and always uphold the full faith and credit of the United States of America.”

We went from never taking the easy way out to hoping we can agree to pay our sizeable bills.

And so we have chosen to take a meat cleaver to the budget when a scalpel would do the job better. That doesn’t mean the cuts should be smaller, but they should be more precise.

Sequestration 101
While most entitlement programs are exempt (Medicaid, Medicare, Social Security, Food Stamps, etc.), the greatest impact is in defense spending where the cuts reach 7.9 percent. The theory is straightforward enough; after adjusting for exempt programs, the sequester must be applied evenly to every “program, project and activity.” This is what makes it so hurtful. We’ve decided to shave about 0.6 points from the GDP growth rate in 2013.

Utah impact
Utah will be hit harder than many states. We are 25 percent more dependent on the federal government than the U.S. average. The greatest impact will be felt by federal workers (we have 32,000), civilian defense employees (another 15,000) and recipients of federal aid. The cuts will also impact special education, at-risk schools, mineral lease payments, the National Guard and childcare, as well as low-income home energy assistance, and substance abuse treatment.

The better path forward
In short, elected officials from both parties could score a big victory by dialing down the bickering, showing some restraint when it comes to mass-producing regulations that hamper the free enterprise system and generally getting out of the way of a Wall Street looking for signs of stability to unleash a wave of capital ready for investment and hiring. That will add fuel to the sparks in the Main Street economy.

We’re poised for stronger growth, but too often we are our own worst enemy.